VZCZCXRO6516
RR RUEHCN RUEHGH
DE RUEHGZ #0384/01 1740907
ZNR UUUUU ZZH
R 230907Z JUN 09
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 0719
INFO RUEHGZ/CHINA POSTS COLLECTIVE 0194
RUEHBJ/AMEMBASSY BEIJING 0548
RUEHGH/AMCONSUL SHANGHAI 0124
RUEHHK/AMCONSUL HONG KONG 0176
RUEHCN/AMCONSUL CHENGDU 0122
RUEHSH/AMCONSUL SHENYANG 0134
RUEHIN/AIT TAIPEI 0140
RUEAIIA/CIA WASHDC 0181
RUEKJCS/DIA WASHDC 0177

UNCLAS SECTION 01 OF 02 GUANGZHOU 000384 
 
SENSITIVE 
SIPDIS 
STATE FOR EAP/CM, DRL 
 
E.O. 12958: N/A 
TAGS: ELAB PHUM PGOV CH
SUBJECT: South China Labor Market - Good News and Bad News for 
Migrant Workers 
 
¶1. (SBU) Summary: If you're a migrant worker looking for a job in 
southern China, the latest news on the labor market is mixed.  Job 
seekers still outnumber job openings in Guangdong's Pearl River 
Delta (PRD), but some companies are having trouble finding enough 
skilled workers.  Overall, leaders of labor non-governmental 
organizations (NGOs) tell us that labor market conditions are 
largely unchanged in Guangdong from six months ago.  One NGO 
representative told us, however, that the labor market in nearby 
Fujian Province was improving for migrant workers.  The NGO leaders 
also noted that rates of workplace injuries and new labor dispute 
cases were decreasing, with less overtime and workers lacking faith 
in the legal system as possible explanations.  Some migrant workers 
are starting businesses in their hometowns or trying their luck in 
other parts of China, but labor mobility is still discouraged by the 
inflexible social security system.  End summary. 
 
--------------------------------------------- ---- 
Little Change in Guangdong, Improvement in Fujian 
--------------------------------------------- ---- 
 
¶2. (SBU) First the bad news: there are more job seekers than job 
openings in the PRD cities of Guangzhou and Shenzhen, according to 
leaders of labor NGOs in the two cities.  In separate conversations 
with us, the NGO leaders said that local companies, feeling the 
pressures of the global financial crisis, are continuing to downsize 
or in some cases completely shut down operations. 
 
¶3. (SBU) The good news?  One Shenzhen NGO leader noted that, even 
though some workers cannot find jobs, some companies are having 
trouble hiring enough skilled workers.  In addition, a smaller 
proportion of workers who traveled to their hometowns for the 
Chinese New Year holiday have actually returned to the cities for 
work, said one NGO leader.  Some chose to stay home and start their 
own businesses, for example setting up food stalls or opening shoe 
polishing and repair shops.  One NGO leader claimed that labor 
market conditions in the Pearl River Delta (PRD) were better than in 
the Yangzi River Delta (YRD).  Nonetheless, some migrant workers who 
have failed to find jobs in the PRD have moved on to the YRD to try 
their luck there.  Many migrant workers looking for work are still 
relatively discerning despite the global financial crisis and are 
unwilling to take just any available job. 
 
¶4. (SBU) Overall, the NGO leaders believe the labor markets in 
Guangzhou and Shenzhen have not experienced any dramatic changes 
over the past six months.  One NGO leader in Shenzhen pointed out 
that it was difficult to assess whether the unemployment rate was 
significantly higher than in previous years because of the apparent 
shortage of skilled workers. 
 
¶5. (SBU) Labor market conditions in nearby Fujian Province, on the 
other hand, appear to be improving, according to one NGO leader who 
recently traveled there. Since May, he said, there have been signs 
that the Fujian economy is picking up; factories are now receiving 
orders from overseas buyers resulting in the rehiring of migrant 
workers.  However, he noted that wages had fallen, possibly to the 
2006 level. 
 
--------------------------------------------- ---- 
Decrease in Work Injuries and Labor Dispute Cases 
--------------------------------------------- ---- 
 
¶6. (SBU) In Guangzhou, a decrease in work-related injuries is one 
indication the labor supply currently exceeds demand, according to 
one NGO leader in Guangzhou's Panyu District.  Since fewer jobs are 
available and fewer hours are spent on overtime work, work-related 
injuries have decreased, he said.  He also asserted that because 
fewer jobs were available, the number of labor dispute cases that 
usually come to his attention had decreased slightly. 
 
¶7. (SBU) However, according to an NGO representative in Shenzhen, 
labor dispute cases have decreased because a growing number of 
workers have come to realize that the government tends to rule in 
favor of employers in cases concerning overtime payment and other 
compensation.  As a result, he said, they have simply given up 
fighting for their rights. 
 
------------------------------------- 
Little Government Support for Workers 
------------------------------------- 
 
¶8. (SBU) Several NGO leaders noted a lack of government support for 
 
GUANGZHOU 00000384  002 OF 002 
 
 
unemployed migrant workers.  Although the Shenzhen local government 
held a few job fairs after the Chinese New Year holiday, it has not 
provided as much assistance to migrant workers as it claims, said 
one NGO leader.  While some local governments in the hometowns of 
the migrant workers say they are helping workers acquire loans to 
establish their own businesses, workers often need to have 
collateral or some other form of "guarantee of repayment," which 
most lack.  In the opinion of one NGO representative from Shenzhen, 
local governments are more concerned about the survival of 
enterprises than the survival of migrant workers. 
 
--------------------------- 
The Social Security Problem 
--------------------------- 
 
¶9. (SBU) Some NGO leaders pointed to China's social security system 
as part of the labor market problem because it discourages labor 
mobility.  Only a small percentage of Guangdong's migrant workers 
are covered by the government social security system, according to 
an NGO representative and a university professor from Guangzhou.  In 
Guangzhou, an estimated 700,000 to one million migrant workers are 
covered by the system, but the total population of migrant workers 
numbers several million.  Those workers employed by large 
foreign-invested companies and SOEs stand a better chance of being 
covered by the social security system than their counterparts in 
smaller, privately owned companies. 
 
¶10. (SBU) Because social security funds cannot be transferred from 
one province to another, migrant workers who return to their 
hometown or move to other provinces will not receive social security 
benefits paid for in Guangdong.  According to one Shenzhen NGO 
staffer, while young job-seekers are willing to try their luck in 
other PRD cities and provinces, the older job-seekers are returning 
home.  An NGO representative in Guangzhou said that, based on his 
experience, migrant workers are short-sighted: they withdraw their 
social security contributions whenever they can, not caring about 
what they will live on in retirement.  The Guangzhou-based professor 
pointed out that efforts are underway at the national and provincial 
level to address the lack of transferability. 
 
GOLDBERG